Comprender la naturaleza de la escuela

Since the beginning of 1994 commercial banks have almost halved their loan portfolios. There are several reasons for this reduction: (a) there are few companies in the country that banks consider a good risk; (b) the banks themselves have little experience in lending (indeed recent bank crashes have been because of appalling credit management); (c) local citizens are wary of the reliability of Kazakh banks as well as tax authorities, and generally keep their savings at home; (d) theoretically, the banks are more or less covered from a legal standpoint, but in practice bad debt recovery is a long and laborious procedure; and (e) the annual interest rates that banks are charging (in line with the NBK refinancing rate) of between 28% to 40% are similar to the return that can be achieved on the T-Bill market. Therefore, considering that the returns are tax free, as far as local banks are concerned, investing in T-bills carries a lower risk and higher reward than lending. Additionally, most banks are undercapitalized, with only eight or nine banks having paid-in capital of US$5 million or more. Each of the 50 smallest banks have less than US$1 million in assets (US Embassy, 1997b).

As a consequence of reduced portfolios and under-capitalization, commercial banks offer limited choices in financial instruments and services to both consumers and businesses. Another consequence is that Kazakh banks do not have the ability to finance major projects. Tenge-based loans from Kazakh banks carry a very high interest rate, often 20 percent higher than the refinancing rate. These high rates are set partly because the rates lag behind falling inflation and partly because the banks are trying to compensate for losses due to the bad loans of the past. The official NBK refinancing rate as of December 1997 was 18.5 percent, down from a high of 300 percent in March 1994 (NBK, 1997).

6.2.1 Commercial Bank Interest Rates and Loan Terms

Table 6.2 shows the nominal and real interest rates of credits offered to enterprises and individuals by commercial banks in Kazakhstan. The interest rates are for short-term credits that usually have a maximum maturity of one year. Hard currency loans are usually only provided to legal entities. Considerable divergence exists between interest rates for loans issued in Kazakh tenge and hard currencies, with the greatest margin being recorded in real interest rates in September 1995, the time when the NBK began to make such data available (Center for Economic Reforms, 1997b). In contrast, the difference in

dramatically since 1995. For example, in September 1995 that margin was 65 percentage points, compared with 2 percentage points in December 1997.

Complaints voiced by managers of enterprises that participated in interviews during the course of this study not only focused on the current high level of interest rates, but also on the fact that long-term credit is not available, and that collateral and guarantee requirements are strict. Access to loans of more than one year is especially important for manufacturers, who need capital to finance projects or introduce new products. However, commercial banks view manufacturers as a higher than normal risk precisely due to the length of time needed to recover an investment and also because of the recent overall poor performance of loan repayment in all sectors.

6.2.2 Financial Services

Many large banks offer personal banking services, and money transfers from the West can be completed in as little as twenty-four hours through the SWIFT network. Some banks also offer automatic teller machine (ATM) services for cash withdrawals. Day-to- day transactions that are a part of international trade can be cumbersome in Kazakhstan because of weak services provided by banks and their inexperience in dealing with foreign companies. For example, Kazakh banks require that legal entities wishing to withdraw funds from hard currency accounts in local banks present an invoice for goods or services to be purchased to prove that the currency is needed. Foreigners have complained that this requirement is burdensome, as businesses cannot predict future expenses in any given month. Problems have also been reported in processing letters of credit (L/C). In general, importers must deposit enough funds to cover the payment of a shipment of goods before applying for a L/C. Local companies can apply at any one of several local commercial banks to obtain an L/C, which in most cases, according to Kazakh banking legislation, must be confirmed by a reputable Western bank. Performance on L/C's has been poor due to Kazakh commercial banks' inexperience with letters of credit, as well as the frequent inability of Kazakh firms to pay for products and services obtained through letters of credit.

Figure 6.2 Spread in Interest Rates

of Tenge-Based Loans

0 50 100

The Machinery Industry in Kazakhstan: Economic Conditions and Policies

Table 6.2

Nominal and Real Commercial Bank Interest Rates on Credits, 1995-97 (in annual percentages)

Non-Banking Legal Entities Individuals Kz. Tenge Hard currencies Kz. Tenge Nominal Real Nominal Real Nominal Real

1995a/ 92.7 89.6 21.2 18.1 33.1 29.9 Sep 102.8 102.4 14.2 13.8 37.7 37.3 Oct 93.0 88.9 13.5 9.4 31.9 27.8 Nov 83.9 79.5 26.6 22.2 28.7 24.3 Dec 91.1 87.5 30.4 26.8 33.9 30.3 1996 65.9 63.8 22.4 20.2 30.2 28.0 Jan 87.1 83.0 27.0 22.9 36.9 32.8 Feb 86.6 84.1 26.6 24.1 32.8 30.3 Mar 85.2 83.5 27.4 25.7 27.1 25.4 Apr 69.9 67.0 22.8 19.9 30.5 27.6 May 69.2 67.2 23.9 21.9 26.1 24.1 Jun 72.2 69.7 22.9 20.4 31.3 28.8 Jul 59.3 57.5 20.1 18.3 34.1 32.3 Aug 54.8 54.1 20.6 19.9 29.1 28.4 Sep 65.7 64.5 18.9 17.7 30.0 28.8 Oct 49.4 46.5 20.7 17.8 27.8 24.9 Nov 45.1 42.7 19.1 16.7 28.7 26.3 Dec 46.0 45.2 18.3 17.5 27.6 26.8 1997 34.6 33.7 14.9 14.0 23.6 22.7 Jan 40.3 38.2 17.5 15.4 25.0 22.9 Feb 37.4 35.7 17.1 15.4 25.5 23.8 Mar 36.5 35.7 14.6 13.8 24.8 24.0 Apr 35.9 35.1 15.1 14.3 25.9 25.1 May 39.4 39.0 19.2 18.8 24.7 24.3 Jun 37.6 36.8 15.5 14.7 23.6 22.8 Jul 37.3 36.6 13.7 13.0 23.7 23.0 Aug 35.0 35.3 14.0 14.3 22.8 23.1 Sep 34.5 34.6 13.8 13.9 21.9 22.0 Oct 28.8 27.7 13.1 12.0 21.9 20.8 Nov 28.7 27.2 12.6 11.1 22.1 20.6 Dec 23.9 22.6 12.0 10.7 21.7 20.4

a/ Average based on data for September-December.

Source: National Bank of Kazakhstan,Statistical BulletinNo. 12 (37) December 1997.